Repair Debt Consolidation. What Do I Need to Know?
have more debt than income? Do your payments add up to more than your income?
Are you struggling with money every month? Are credit cards and loan payments
eating up all your income? Are you ready to do something about it? If you are
considering credit repair debt consolidation then keep reading. Below are some
things that you need to know before you begin.
What is the Difference between
credit repair and debt consolidation?
Many people assume that credit
repair and debt consolidation are the same thing. While consolidating your
bills and debt may be one way to repair your credit, it does not actually eliminate
your debt. Credit repair is a process of eliminating your debt and or repairing
black marks on your credit report. This is the best option for those with bad
credit. Repairing your credit can be done on your own or with the help of an outside
agency. Debt consolidation requires outside help. If you are looking for credit
repair debt consolidation you will need to find a lender to take all your bills
and condense them into one. To repair your credit you will have to make the payments
as set up by this lender otherwise you will not help it at all.
your credit can be done several ways. If your credit is bad and you are seriously
delinquent in many of your payments, the best option may be to get a copy of your
credit report from the credit bureau and begin paying off one thing at a time
until everything is paid off. This will slowly begin to reduce your debt and increase
your credit score. It is not advisable, however to negotiate with a creditor for
a reduced payoff. This does show on your credit as being paid, but not as paid
in full. It can be a good option if it is all you can afford to do, but if you
can pay all of it, do it. It will be much better for you in the long run to pay
in full and it shows up better on your credit report.
The best option is
to get a credit counselor to get you set up with credit repair debt consolidation.
This is usually done by nonprofit organizations. They will get all your debt together
and contact all your creditors for you. They will negotiate lower interest rates
and reduced fees that will not reflect negatively on your report. They will put
all this together and give you a total debt owed report. Then they break this
total down into one monthly payment. You send them the one payment that they evenly
disburse to your various creditors. Most of their plans eliminate your debt in
18 months to 3 years, depending on how much you owe and how much you can afford
to pay. They will usually ask for a monthly donation to cover their costs, but
this donation is not required. With this option, if a bill collector calls you,
you can simply refer them to your credit counselor. This option is a lot less
stressful, a lot less work, and much easier to stick to. It is the best option
for anyone wanting to eliminate their debt.
consolidation is a completely different option. This option uses collateral
(usually your home or business) to give you a loan to pay off all your bills.
This can be a great option if you can afford the bill. The way it works is you
get a loan from the bank for the amount of all your debt and you put up your house
as collateral. If you fail to pay or are even late on a payment, the bank has
the right to take your house. If you can't afford the payments, or there is a
chance you can even be late, DON'T choose this option. If you can afford to pay
the payments, this is the quickest way to, not reduce your debt, but reduce the
number of bills and monthly payments, and pay off your creditors. You still have
the same amount of debt, but only one bill.
These are two different approaches
to working with your credit. Both have their benefits. You just have to choose
which is best for you.